Washington, DC – December 17, 2015 – (RealEstateRama) — Real estate investing is an attractive career idea for multiple reasons. There’s ample opportunity once the economy begins improving and jobs come back, and there is no shortage of buyers. Rental income is relatively stable if you’re successful at finding tenants, and real estate investments tend to fare better than stocks in a volatile climate. The economy is beginning to stabilize, but events around the world continually rattle investor confidence.
Real estate investment takes sound planning, but it can lead to a stable income. Even as a side gig. If you follow this advice, and keep your mind open to learning more about the process, you can make deals happen.
Begin with a Clear Plan
One of the most common mistakes is beginning with a “get rich quick” attitude. Start with a self-assessment. Ask yourself: if you had to compare your allocation of time and money, which would you have more of? For most people, the answer is time. Take the time you do have to formulate a solid business plan that factors in realistic expenses and target revenues. Perform a cost-benefit analysis on a sample property if you’re struggling for realistic numbers.
During your planning phase, choose a location you can stick to. You’ll find investing to be a more manageable endeavor when you can stay local to a single area.
Find Good People and Build Relationships
Real estate is a business built on who you know. When you have people you trust, deals tend to go smoother and you get rewarded for your efforts. One great place to start is the National Association of Real Estate Investors. A resource like NAREI will offer business plans, strategies, forums for discussion, access to resources, schedules for conferences and contacts in your area. These are crucial for the early stages of your business. Simply put, you need advice from people who have been where you are. National organizations like NAREI help put you in touch with those people.
From there, you can take the advice of Conan O’Brien: “If you work really hard, and you’re kind, amazing things will happen.”
Develop a System to Analyze Properties Thoroughly
There are a lot of advice columns out there talking about what makes a good real estate investment. According to ThompsonLaw.ca, there really are no “typical investors” and people should stop thinking in that mindset. Each investment will present unique opportunity. Land in one city might not produce for fifteen years, at which point the value might skyrocket, while a rental property in another will be hot as long as there are jobs in town and become a liability when employment is low.
There are many tools to help give you some perspective on all this, and it’s best to begin with simple tools that output data you can use. Begin with the low-hanging fruit: comparable property data, recent sales in the area, upgrades made to the property, and potential time the home will remain on the market if you decide to flip or rent. These statistics should be easy to begin with. You can dig into more advanced stats as you become more adept at analyzing a property, but don’t invest too much in analysis. You’ll end up overwhelmed by information and unable to act.
Budget and Spend Responsibly
The final piece of advice is to budget responsibly for the costs you know you’re going to have. Maintenance is a good example. Unless you plan to make repairs yourself, which might require making rounds to your various properties, you might want to consider working with a property manager of some form. When you perform your cost-benefit analysis, take a minute extra to think about which expenses are likely to become recurring or frequent. Once you have a clear picture of your finances, you can determine how many holdings you can responsibly keep. Those are the first steps in creating a solid foundation for a real estate investment business that can scale.